Ginkgo Bioworks Holdings, Inc.

Ginkgo Bioworks Holdings Inc. (NYSE: DNA) is developing a platform that allows customers to manipulate cells with the same ease as programming computers. Their platform is versatile and can be applied to various markets, spanning from food and agriculture to industrial chemicals and pharmaceuticals, making it market-neutral and applicable across a wide range of biotechnology applications.

Recent Financial and Business Updates:

• Second Quarter Income Statement Review:
  • The company reported total revenue of USD81 million, which marked a 44% decline compared to the same period in the previous year. This decrease was mainly due to the anticipated reduction in K-12 testing within Ginkgo's Biosecurity segment.
  • Cell Engineering revenue was USD45 million, slightly higher than the USD44 million recorded in the corresponding period of the previous year.
  • Biosecurity revenue for the second quarter of 2023 amounted to USD35 million, with a gross profit margin of 49%.
  • The company reported a loss from operations of USD184 million, which includes a stock-based compensation expense of USD62 million.
  • Adjusted EBITDA for the second quarter of 2023 was USD75 million, down from USD24 million in the corresponding period of the previous year. This decline was attributed to both the higher expense run rate in Cell Engineering and the anticipated decrease in Biosecurity revenue.
  • As of the end of the second quarter, Ginkgo held approximately USD1.1 billion in cash and cash equivalents.
• Balance Sheet Review:
  • Total assets amounted to USD2.291 billion as of June 30, 2023.
  • Total liabilities were USD788.41 million as of June 30, 2023.
  • Total stockholders’ equity was USD1.503 billion as of June 30, 2023.
  • Cash, cash equivalents and restricted cash at the end of the period was USD1.172 billion.
• Business Highlights & Strategic Positioning:
• Ginkgo significantly expanded its Foundry platform by adding 21 new Cell Programs, which reflects a 62% growth compared to the same period in the previous year.
• Alongside welcoming new customers to the platform, Ginkgo also advanced and expanded collaborations with leading companies in the market, such as Sumitomo, Novo Nordisk, and Merck.
• Ginkgo's Cell Engineering segment demonstrated strong performance, generating USD44 million in services revenue during the second quarter, marking a notable 72% increase compared to the same period in 2022.
• Ginkgo's Biosecurity segment reported revenue of USD35 million in Q2 2023. This shift in revenue composition was influenced by the conclusion of the COVID-19 public health emergency in the United States during the quarter, resulting in a transition away from COVID-19 testing programs in schools and communities toward a more recurrent model focused on establishing long-term biosecurity infrastructure.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period stands at 40.41, downward trending with expectations of further bearishness to important support levels near USD 1.20-USD 1.40. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a “WATCH” rating is recommended for Ginkgo Bioworks Holdings Inc. (NYSE: DNA) based on the current price of USD1.71 as on October 03, 2023, at 7:21 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 03, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

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